What and What Not to Worry About in the Global Economy

The near-term outlook for the global economy is more promising than the medium-term forecast. Adam Posen, President of the Peterson Institute, argues that the reduction of policy risks in the three largest economies — the U.S., China and the euro area — should lead to a respectable recovery in 2013 and 2014. Policy risks, however, have emerged in the mid-major economies — including Brazil, India, Japan, Korea, Russia and the UK — and in the exchange rate system that ties them to the major economies. This development, combined with the prospect that potential growth in the West has been lastingly damaged, suggests that recovery is unlikely to last.

Adam Posen is President of the Peterson Institute for International Economics, a non-partisan think tank on economics and globalization. He is one of the world’s foremost experts on fiscal and monetary policy. Dr. Posen served for three years commencing September 2009 as an external member of the Bank of England’s rate-setting Monetary Policy Committee. Previously, Dr. Posen worked in finance in Germany following reunification; authored a book on Japan’s economic crisis of the 1990s and counseled the Koizumi government; co-authored with Ben Bernanke a reform program for Federal Reserve policymaking and is an adviser to the Congressional Budget Office. Dr. Posen joined the Peterson Institute in 1997, after working at the Federal Reserve Bank of New York. He received his AB and PhD from Harvard University.

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